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Bricks & Sticks

by Desi Auciello

Desi Auciello is the 2006 GTHBA President, and is also president of Cachet Estate Homes.

The Millionaire Homeowner

Date: June 30, 2006

"If you want to be rich, don't rent. Nothing you will ever do in your lifetime is likely to make you as much money as buying a home and living in it," says author David Bach, author of The Automatic Millionaire Homeowner.

 "The first-time buyer has to ask himself, "Can I afford the mortgage payment?  Is my job secure?  And, do I plan to be in the community for awhile?'" If all the answers are yes, then buying rather than renting will be a better financial decision in the long run, Bach says.

"And don't worry about timing the market - it's time in the market that will matter for you," Bach adds.
GST reduction

This particular Canada Day weekend is extra special because of the fact that the one per cent reduction in the federal goods and services tax kicks in on July 1.

Actually, the tax cut on new homes was back-dated to the day of the federal budget (May 2nd) to avoid serious disruption to the market, but not all would be home buyers were aware of this fact.

If you are one of those home buyers that thought you had to wait until now to get the tax break, there is no excuse now. You even have an extra day this week-end to get out and search for that new dream home or condominium.
Warranty coverage

Also effective July 1, the maximum coverage offered by the Tarion Warranty Corporation doubles from $150,000 per home or condo to $300,000. This increased protection is being extended without any increase in home enrolment fees (the Tarion term for premiums). In fact, Tarion enrolment fees will actually be declining slightly because of the one per cent GST cut.
While the chances that the maximum coverage would ever come into play are miniscule, the increased protection is indicative of Tarion's constant quest to enhance consumer protection for Ontario's new home buyers.

Visit www.tarion.com complete coverage details.

Mortgage insurance

There have been some developments on the mortgage insurance front which should have positive impacts on home buyers.
The Canadian Home Builders' Association notes that half of all Canadians are now using high-ratio mortgages, prompting the federal government to allow more competition. 

Currently, there are only two players in the mortgage insurance market -- Genworth Financial Canada and Canada Mortgage and Housing Corporation -- however Ottawa has received at least two applications by U.S. mortgage insurers to enter the Canadian market.

The federal government has also increased the guarantee for insurers from $100 billion to $200 billion. 

In a related move, the government announced it is proposing to lower the mortgage down payment consumers are required to make to 20 per cent from 25 per cent before the law requires the purchase of mortgage insurance. 

Legislation based on the proposals will be introduced this fall and will be studied by a parliamentary committee before passage, expected next winter, pending an election.

Numbers Game

The list of the top 100 builders in the United States always reveals some mind boggling numbers and other items of interest.
D.R. Horton Homes topped the volume list with 51,383 closings in 2005 or roughly 200 home closings each and every business day. Horton's volume is greater than the annual output of all the builders in Alberta having their best year, and equivalent to approximately 20 per cent of the entire Canadian new home market.

While second place Pulte Homes closed a mere 45,630 homes, it edged out Horton in gross revenue, topping the list at $14.7 billion. To put that number in perspective, RealNet Canada Inc. reports that the total value of all homes and condos (42,629 units) sold by all GTA builders in 2005 amounts to approximately $14.5 billion.

Habitat for Humanity International fell a number of places in the annual listing but still managed to rank as the 18th largest builder in the United States with nearly 5,000 closings last year.

Meanwhile, Canada's largest home builder, Mattamy Homes, jumped from 109h to 67th place, with 1,250 U.S. closings in 2005. If you added Mattamy's GTA sales to their U.S. closings, Mattamy would rank among the top 20 largest builders in North America.